Snap is on a mission to diversify its revenue streams — moving from a business model in which it largely chases ad revenue to one where it can also make money through subscriptions and eventually hardware. The company’s latest quarterly earnings report shows that the firm has had modest success with this strategy so far.
In Q4, Snap’s revenue was $1.7 billion, up 10% year over year. Its average revenue per user also increased slightly (to $3.62 from $3.44). The company’s net income was $45 million, up from $9 million a year earlier, the earnings report said.
The company also continues to generate a significant amount of revenue from Snap+, a paid subscription service that the platform launched as early as 2022. The number of subscribers to the service grew by 71% year-over-year to 24 million.
While these numbers may seem to indicate a company whose trajectory is headed in the right direction, the earnings report also shows that the platform had slightly fewer daily active users last quarter — down from 477 million to 474 million. The report shows that these users have declined in North America and Europe, while they are growing slightly in the rest of the world.
Reuters also reports that the company expects its revenue during the first quarter of this year to be lower than analysts’ previous estimates as competition from Facebook, Instagram and TikTok erodes its advertising revenue.
During Wednesday’s earnings call, CEO Evan Spiegel focused on the company’s newer offerings, including its recent push to charge users for Memories storage — a feature that lets users store and save their snaps — and its plans to launch Specs later this year. The company hasn’t launched a public version of augmented reality glasses since 2019. In anticipation of this event, Snap recently announced the creation of a new subsidiary, Specs Inc., which is solely focused on further development of the glasses.
“Our long-term vision for augmented reality extends beyond the smartphone to a future where computing is more natural, contextual and seamlessly integrated into the real world,” said Spiegel. The CEO added that it was important to develop a “strong stand-alone brand” for Specs, as he said the hardware product could appeal to a “different segment of the audience” than Snapchat’s “core audience.”
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That said, it sounds like the strategy behind Specs may not be completely fine-tuned yet. Later in the interview, Spiegel continued, “We’re so close to launch that the key is really just, you know, nailing the launch and making sure we deliver an extraordinary product. And then, you know, I think we have a lot of flexibility to think about how (to) we want to use that going forward.”